Will Recession Mean an End to the Baby Boom?
Will Recession Mean an End to the Baby Boom?
Just a random thought over lunch, I wonder how the recession will impact Australia’s sky-high birth rate?
The official statistics tell us there were 280,781 babies born in 2007, the highest number on record and a 14% increase on the 246,821 born in 2002. You don’t need statistics to convince me. The little screamers are spreading like the plague in my inner-Sydney suburb.
Anecdotally, it would seem a large proportion of the increase has come from higher socio-economic groups and that more and more university educated parents are willing to spend the early years of their baby’s life at home. Couples have been willing to make the required financial sacrifices in the knowledge that jobs are plentiful and career progression will resume unimpeded when the stay-at-home parent returns to work.
That might change now that jobs are difficult to come by. Not only might the stay-at-home parent not have a job to return to, but living off one salary is decidedly risky – especially if your partner works in finance.
I don’t know if this theory has legs or not. Perhaps the baby boom has more to do with changing social norms or the government’s financial incentives? One thing’s for sure. Much has changed in the world since our last recession 17 years ago and the impact of a modern recession might be very different from its predecessor. Any predictions?
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I reckon the baby boom's got little to do with government incentives and far more to do with the age of the first generation of women who are largely university-educated.
The size of universities boomed in the early nineties (see Sydney Uni) and the increase included a much higher proportion of women. That generation of girls has put off babies in favour of employment (and travelling, and partying!), but they and their guys are hitting their early-to-mid 30s right about now and it's now-or-never for breeding.
If that logic holds true then the recession will have minimal effect, because no amount of financial stress can quieten the ticking clocks...
To take the contrarian view, it may be that quite a few of the (mostly Gen X and prior) households with couples in their late 20's and early to mid 30's might actually take the enforced break of a down-turn to take the opportunity to "make babies" - something that has been on the back-burner against career etc for some time.
Many (by no means all) of the people in this bracket (especially the educated professionals who have deferred children to-date) are in at least semi-security, owning their own apartment or most of their own house, with debt levels that may be serviced on a single income.
It may just be the case that an economic down-turn creates the "baby break" opportunity that many women (and their partners) have been looking for, elusively, over the last few years.
Just a thought.
God knows why people decide to have children. The are too many variables and situations to draw any conclusions - unless someone has historical data on birth rates and economic growth.
We just had two lovely twin boys. Shocking financial decision but very cute! :-)
Stay optimistic. Don't panic.
My 2 x G grandmother had 13 and not a penny to bless herself when times were really tough,
My parents had me in the so called boom times and only two others = 3,
So I do not believe it is financial, but more selfish (Me Me) reasons.
Peasants are not selfish
There is historical data on birthrates and economic or market growth. Look up the '47 year effect' and the fall in birthrates of 1961, which was very strong in the US.
I had a similar (but different) thought the other week. My feeling was towards the obesity epidemic - will people now lose weight as they wont want to spend as much cash on fast food???
Just as some things rise with the market perhaps they will subside with it too.
One of the commonest mistakes that thinkers make is to confuse correlation with causation (statistically speaking, going to a hospital is one one of the most dangerous things that you can do!).
Just as a man with a hammer sees every problem as a nail, so too I think that I think that you're connecting demographic changes with your area of expertise.
I wouldn't be surprised if right now, a group of meteorologists somewhere on the internet were discussing exactly the same statistic and wondering if changing weather patterns have been causing the recently rising birth rates, or a group of epidemiologists were looking at the correlation between higher birth rates and the disappearance of some obscure pathogen.
Shum is correct ... there is so much confusion in finance (as well as society at large, and even occasionally in science!) between correlation and causation.
Post hoc ergo propter hoc was a well-identified logical fallacy over 2000 years ago, and it appears we have advanced little in the intervening period.
While not disputing Shum's logic, it makes intuitive sense (to me at least!) that a higher birth rate should be correlated with (although not be caused by) short term economic prosperity. While the declines and increases may not be statistically significant more recently, I thought this table of (American) birth rate figures was interesting:
http://www.infoplease.com/ipa/A0005067.html
There was certainly a steep decline in the birth rate in the 1930s, and to a lesser extent during the 1970s, both times of relative economic turmoil (although whether it would be 'statistically significant' I'm not sure). I accept this doesn't mean causation, but general optimism or pessimism about the future would (to me) seem likely to influence the birth rate in the short term (i.e. over years). Over the long term, the falling birth rate has been attributed to rising wealth, but again this seems more like correlation than strict causation.
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